Recently it feels that every new startup is creating a subscription model (learn how to get more subscribers here) and focusing on that as there main source of revenue. Not surprisingly, we are doing that in our business. I did a fair amount of research and here are some things to test and use if you are doing an online subscription model business.

Test varying lengths of time if you want to do a free-trial program: 7, 14, 30

A/B test 50% off vs $50 off (or some equivalent amount)

Allow them to subscribe for 1,2,3 years and default to 2 years. While building Facebook (read about my first day of work at Facebook) advertising users would more than average use the amounts and timeline that we defaulted too

Add security badges to your confirmation page. BBB, hacker safe, etc…

Provide a phone # on that page in case they are having doubts

Use intellichat.com. Will talk more about this in a future article. Definitely one of the best startups on the market today.

My post about Mint v. Wesabe is similar and shows how small changes and focusing on key things will help you gain users, subscribers and ultimately help you beat the competition.

One of the most important things is to get the users to pay you something. Credit card, paypal or the new mobile payment services (mobillcash or zong). Once you have it you can make it one click ability to pay for other things and upsell them. If I missed anything please let me know.

26 responses to “15 Ways to Optimize your Subscription Model”

I think one thing you missed was that if you were going to do a free trial period, get the Credit card info at the initial time of register but do not charge until the end of the trial.

The response is that it hurts immediate conversions, which is true, you’ll have less people signing up for the trials. But the people you’ve lost are the ones who are quite less likely to pay for the service.

People who are serious about signing up will usually sign up for the trial anyways. After the trial period, unless they discover it just doesn’t fit their needs or desires, they’ll let you charge them and the you’re off to the races.

Along with this is the tenet that it’s much easier to keep a user subscribed than to get them subscribed in the first place.

I don’t have any figured to support these statistics but it’s something I heard in a Psych class back in college.

The goal with a free trial is to put as few speed bumps as possible in the way of the person experiencing the trial, and a credit card number is a wall-sized speed bump.

Yes, you will get a very large number of people who join the trial and don’t purchase the software, but that’s quite explicitly the point. People are far more inclined to try something they can easily walk away from. If they have to worry about what kind of hassle they’re going to get in canceling their subscription and getting their credit card number out of your system, they are significantly less inclined.

The free trial gets them in the metaphoric door, introduces them to the software and makes it easier to sell to them. From that point on it’s up to you and your application to convert them.

Definitely absolutely give people a chance to sign up with a full account right away. Credit the free trial time to their account but take a credit card number any time someone wants to give it to you. But don’t make a credit card a condition for that trial.

The credit card thing is worth testing. In our case, quite a few of our customers require and invoice or want to pay annually, so a month-to-month is not for them. Even for the trial their wary of getting dinged accidentally and having to get reimbursed by their boss (our clients are mostly business, nonprofits and universities).

I too would agree that getting a cc at the beginning is a put off for me. I want to test and use the software with as low a barrier as possible. The other day I looked at a product I wanted to try, but they wanted a credit card and I walked away.

Here is another thing to think about. So yeah you got someone to sign up and they don’t want the software and they don’t delete their subscription, like LOTS of people do. Now you have people doing charge backs to their cards and or creating quite a bit of customer support nightmare with people asking for refunds ect.

We are not going to do that at Clever Tools as we want to keep our customer support numbers to as small a number as possible.

Also, like others have stated, without a credit card more people sign up.They may decide not to pay for the software, but now you have a whole database of people you can send offers and other incentives to. If you make the barrier to entry high, then you have less people to market to in the end.

Noah, if you have any more ideas for posts like this or if you do some a/b testing on any of the bullet points – please do share, they’re great.

I would also be inclined to hold out on taking the CC number until potential customers have accessed the free trial. The apps that I pay for on my Mac are those that got me hooked and then seriously crippled the functionality (or blocked access) after a trial period. If you’re interested in a great example of a subscription based Web application that is quickly making itself indispensable, check out GitHub.com (for collaborative coding).

And sorry if you’ve posted this somewhere already but, how are the conversion rates looking on your current projects? Are you seeing the industry standard 1%?

Thanks! Ive been suing my Mac Mini to switch to 1024×768 to see how other well known sites do their signup page.. Not sure how we could modify our page to have it all fit above the fold. Most of my competitors, including the behemoth in my space have a much bigger registration page that does not fit above the fold… hmmm.. What to do?

Also, we have shy’d away from 1/2/3 year pre-pays because at the end of the period, the customer needs to make a purchasing decision. Whereas on a monthly auto-billed basis, they don’t have to make a purchase decision at any point in time (unless they don’t like the software of course). Do you find that only a % of people re-signup at the end of the pre-pay period, and therefore a monthly billing cycle is better?

Great tips Noah! From our users, we’ve seen the same trends increasing subscription conversion rates (taking the CC numbers up front., having a positively focused action button, using A/B testing to validate pricing).